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In article <ui901s$4og2$3@dont-email.me>

The freight transport sector has faced a volatile year, with a
series of bankruptcies as a result of diminished freight rates and a
lack of cargo as demand waned, but Lior Ron, CEO of Uber's logistics
subsidiary Uber Freight, says the freight recession may be at a new
"tipping point."

The reason is fuel prices.

Ron said Uber Freight is witnessing more carriers giving back lanes
after bids, which could be an indicator of carriers unable to afford
to run certain shipping routes.

"Low fuel prices earlier this year likely helped many carriers
manage through low rates, but increasing fuel costs may be a tipping
point for carriers operating with little to no margin," Ron said.

Shipper volumes are still down, and carrier rates are still
depressed. And so far in Q4, he said Uber's team has observed
carriers being more selective on the volume that they take in bids
to remain profitable. Shippers, meanwhile, are being more selective
on their carrier mix and have been leaning toward selecting carriers
they think are stable and provide good service, Ron said.

Oil prices have come down from their recent peak, and global
economic growth is projected to slow next year, but geopolitical
risks remain high, from the Russia-Ukraine war to the emerging
Israel-Hamas war in the Middle East. The World Bank warned in a
report on Tuesday that record high oil prices could be reached if
the conflict spreads beyond the Gaza Strip, and the price of crude
able to rise as high as $157. Bank of America recently released a
similar worst-case scenario forecast.

"Fraught with uncertainty" is how the International Energy Agency
recent described the conditions in the oil market.

The World Bank's baseline case assuming there is no oil shock would
result in an average price of $90 a barrel in the current quarter
before crude heads lower in 2024 to an $81 average amid slower
global growth.

Click here to view interactive content
The sharp decrease in freight rates and demand after the pandemic
boom contributed to the demise of venture-backed darling Convoy.
Flexport, another heavily funded logistics startup, recently had a
CEO shakeup and another round of layoffs in October affecting 20% of
its global workforce.

Global shipping container rates have dropped by more than half
compared to a year ago, and are now below the pre-pandemic rates of
2019.

"Numbers don't lie," Ron said. "If you look at the asset side, the
cost of managing a fleet is increasing and it's hard to escape that.
I believe the contract pressure will continue. The non-diversified
brokers and subscale, less financially sound players are feeling a
lot of pressure."

Convoy co-founder and CEO Dan Lewis cited the "massive freight
recession" in a memo to employees explaining its demise.

Uber Freight has had its own challenges this year. In February, it
issued a bearish outlook on the freight market after the company cut approximately 150 jobs, 3% of its workforce. The company had a
second round of layoffs in July of between 40-50 employees.

As it navigates through the freight recession, Uber Freight is
doubling down on sustainability measures, which have been a focus
among VC-backed freight and logistics startups including Convoy.

Using data analytics, AI, and matching/routing solutions, Uber
Freight just released a sea-to-sky emissions dashboard to provide
full visibility and eliminate what's called, "empty miles," which
add to costs, delivery time and climate impact. The company hopes to
streamline the transit of freight which would cut down consumer
costs and increase transport productivity.

"So far we have been able to eliminate 2.4 million empty miles this
year," Ron said. "Clients are also transitioning freight to cheaper,
more sustainable options like intermodal," which involves moving
containers across a combination of transport options such as road,
rail and maritime.

Ron explained you can only reduce empty miles if you digitize the
entire supply chain.

"To achieve sustainability at scale, you need a diversified
portfolio," he said. "This is powered by technology, which runs
through all the segments of business."

Empty miles account for around 30% of U.S. trucking miles, according
to Uber Freight data, and the company estimates that empty miles can
be reduced to as much as 15% with routing and bundling technology.

"That translates into a 10-15% increase in income, not even
including the energy savings," Ron said. "Our goal is 80% clean
transportation across global brokerage shipments by 2040. It's an
ambitious goal, but we want to hold ourselves accountable. We have a
path, a model, and have made the right investments to get there."

Autonomous trucking is part of the model that Ron says will help the
company achieve these goals. Uber Freight has been hauling
commercial loads since 2021 with its autonomous trucking partner
Aurora. Other partnerships include Volvo's autonomous unit, and more
recently, Waabi. Uber Freight's autonomous trucking program makes
daily runs with select customers in Texas to help identify where
autonomous trucks are needed most to alleviate supply chain
bottlenecks.

"We want to help and support shippers and their chief sustainability
officers," Ron said. "We believe sustainability can help increase
their bottom line."

Some of Uber Freight's large shippers include AB InBev, Nestle, and
Land O'Lakes.

Even though there is pressure across the sector, he said
transportation carriers and shippers are preparing for a holiday
season upswing, which includes both Thanksgiving and Christmas, and
then into 2024, the Lunar New Year in February. Though some big
retailers remains cautious about the consumer, including Target,
whose CEO told CNBC on Thursday that the spending pullback is even
starting to hit groceries.

"The next few weeks will be very telling," Ron said.

https://www.cnbc.com/amp/2023/11/02/freight-recession-is-at-a-new- tipping-point-says-ubers-shipping-ceo.html

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